Notice Regarding Issuance ofCompensation-type Stock Options(Stock Acquisition Rights)
KANUMA, May 12, 2023

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Nakanishi Inc. (the “Company”) hereby announces that it has resolved the issuance ofstock acquisition rights as a form of compensation-type stock options, pursuant to theprovisions of Articles 236, 238, and 240 of the Companies Act, in the Board of Directors
meeting held on May 12, 2023.

Investors
Daisuke Suzuki

Corporate Vice President &Group CFO

Masatoshi Akiya

Head of Corporate Communication

1. Reason of issuance of stock acquisition rights as stock options
For the purpose of further enhancement of the linkage among compensation ofdirectors and business performance and interests of shareholders of the Company,
the Company will issue stock acquisition rights as compensation-type stock options
to the directors of the Company as follows.
2. Terms and conditions of issuance of stock acquisition rights(1) Persons to be allocated the stock acquisition rights, the numbers of such persons, andthe number of the stock acquisition rights to be allocated
3 of the Company’s Directors 15 units
The above number of allocations is the number of scheduled allocations, and if thenumber of applications is less than the number of scheduled allocations, the number ofallocations will be the number of applications.
(2) Class and the number of shares to be delivered upon exercise of stock acquisition rights
22,500 shares of the Company’s common stock. However, if the number of shares to bedelivered is adjusted as defined below, the number of shares to be delivered after
adjustment shall be multiplied by the total number of the stock acquisition rights to shares.
The number of shares to be delivered per unit of stock acquisition right (hereinafter,“ Number of Underlying Shares") shall be 1,500. In the event that the Company implements
a stock split (including an allotment of the Company’s common stock without receipt ofmonetary consideration; the same shall apply to the description with regard to the stocksplit hereinafter) or a stock consolidation after the date of allotment of stock acquisitionrights, Number of Underlying Shares shall be adjusted according to the following formula.
However, such adjustment shall be applicable to Number of Underlying Shares of stockacquisition rights which have not been exercised at that time, and any fraction less than
one share resulting from such adjustment shall be discarded.
Number of Underlying
Shares after adjustment＝Number of Underlysing
Shares before adjustment

×Saki Tabei

Corporate Communication Specialist

ir@nsk-nakanishi.co.jp

MediaNobue Ebihara

Corporate Communication Specialist

Kazuki Takagi

Corporate Communication Specialist

Kyoko Toyoshima

Corporate Communication Specialist

pr@nsk-nakanishi.co.jp

Ratio of stock split
or consolidation

The Number of Underlying Shares after adjustment shall be applied, in the case of a stock
split, on and after the day following the record date of the stock split, and in the case of astock consolidation, on and after the effective date of the stock consolidation. However,if the stock split is implemented on the condition that a proposal to increase the amount of
capital stock or legal capital surplus by reducing the amount of surplus is approved atgeneral meeting of shareholders of the Company, and if the record date for the stock split
is on or before the date of closing of such general meeting of shareholders, the Number ofUnderlying Shares after adjustment shall apply on and after the following date of theclosing date of such general meeting of shareholders.
In addition to the above, if it is necessary to adjust the Number of Underlying Shares, theNumber of Underlying Shares shall be adjusted to a reasonable extent.

About Nakanishi Inc.
To achieve the mission of “To create
brilliant progress via innovative
grinding technology,” NSK has
continued to hone the three coretechnologies of high-speed rotary
technology, ultrasound technology
and micro motor technology.
Using these core technologies, NSK
will continue to provide innovative
products in the dental, surgical andindustrial fields, and keep
contributing toward the creation of
all kinds of progress, such as
bringing inspiration, happiness,benefits and joy to society andpeople.
NSK has three main locations fordevelopment and production; RD1,headquarters and A1 factory inKanuma, Japan.
The company’s shares are listed in
the Tokyo Stock Exchange.
Visit www.en.nakanishi-inc.jp
for more information about NakanishiInc. and our products.

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(3) Total number of stock acquisition rights
15 units
The above number is the number of scheduled allocations, and if the number ofapplications is less than the number of scheduled allocations, the total number of stockacquisition rights will be the number of total allocations.
(4) Method of calculating the amount to be paid for stock acquisition rights
The amount payable (issue value) for each stock acquisition right shall be the amountobtained by multiplying the option price per share calculated by the Black-Scholesmodel by the Number of Underlying Shares based on the basic figures in (ii) and (vii)
below (any fraction less than one yen shall be rounded up).

(i)

Option price per share (C)(ii) Stock price (S): Closing price of the Company’s common stock at the Tokyo Stock Exchange on May 31, 2023
(if there is no closing price, the standard price on the following trading day)(iii) Exercise price (X): 1 yen(iv) Expected duration (t): 15 years(v) Volatility (σ): Rate of stock price volatility which is calculated based on the daily closing price of the Company’s common stock for
15 years (from June 1, 2008 to May 31, 2023)(vi) Risk-free interest rate (r): Interest rate on Japanese government bonds whose remaining maturity corresponds to the expectedmaturity(vii) Dividend yield (λ): Dividends per share (Actual dividend for FY2022) / Stock price specified in (ii) above(viii) Cumulative distribution functions of normal distributions (N (⋅))

The amount calculated based on the above is the fair price of the stock acquisitionrights, and is not classified as favorable issuance.
Applicants shall receive monetary remuneration equivalent to the total amount to be
paid for the stock acquisition rights, and this right to demand remuneration shall beoffset against the obligation to pay in the amount to be paid for the stock acquisition rights.
(5) Value of assets to be contributed upon exercise of each stock acquisition right
The value of assets to be contributed upon the exercise of each stock acquisition rightshall be the amount obtained by multiplying one yen, the amount to be paid per share to
be delivered upon the exercise of the stock acquisition rights, by the Number ofUnderlying Shares.
(6) Exercise period of stock acquisition rights
From June 1, 2023 to May 31, 2053
(7) Conditions for exercise of stock acquisition rights
(i)

(ii)

(iii)

A person to whom stock acquisition rights are allotted (hereinafter referred to as "Grantees”) may exercise the stock acquisitionrights only during the period from the day following the day on which the position of the Company’s directors has been lost until
the day on which ten days have elapsed. However, if it is on or after June 1, 2052, the stock acquisition rights can be exercisedeven if Grantees hold the position of the Company’s directors.
Regardless of (i) above, Grantees and their heirs may exercise stock acquisition rights only within the specified period in thecases provided for below. However this shall not apply to the case where the stock acquisition rights of reorganized company isissued to Grantees in accordance with (11) below.
Fifteen days from the day following the date on which approval or decision below was made.
In case either a) or b) is approved at the Company’s general meeting of shareholders. (in case a resolution of the general meetingof shareholders is not required, the date of a resolution of the Company’s board of directors or an executive officer delegatedpursuant to the provisions of Article 416, Paragraph 4 of the Companies Act is taken)a) a proposal for approval of a merger agreement in which the Company ceases to existb) a proposal for
approval of a share exchange agreement or a share transfer plan in which the Company becomes a wholly-owned subsidiary
Partial exercise of each stock acquisition right shall not be allowed.

(8) Amount of capital stock and legal capital surplus to be increased in cases whereshares are issued upon the exercise of stock acquisition rights
(i)
(ii)

The amount of capital stock to be increased when issuing shares upon exercise of the stock acquisition rights shall be one halfof the amount of the maximum increase of capital calculated in accordance with Article 17, Paragraph 1 of the Company
Accounting Regulations, and fractions less than one yen resulting from the calculation shall be rounded up.
The amount of legal capital surplus to be increased in cases where shares are issued upon the exercise of stock acquisitionrights shall be the amount obtained by subtracting the amount of capital to be increased as set forth in (i) above from theamount of the maximum increase of capital stock as set forth in (i).

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(9) Provisions concerning acquisition of stock acquisition rights
In case that any of the following proposals from (i) to (v) is approved at the Company’s
general meeting of shareholders (or in case a resolution of the general meeting ofshareholders is not required, a resolution of the Company’s board of directors or an
executive officer delegated pursuant to the provisions of Section 416(4) of theCompanies Act is decided), the Company may acquire the stock acquisition rights atfree of charge on the date separately determined by the board of directors.
(i)a proposal for approval of a merger agreement in which the Company ceases to exist(ii)

a proposal for approval of a split agreement or a split plan in which the Company becomes a splitting company(iii)

a proposal for approval of a share exchange agreement or a share transfer plan in which the Company becomes a whollyowned subsidiary(iv)

a proposal for approval of an amendment to the Articles of Incorporation, as a matter relevant to all the shares the Companyissues, to establish a provision that the approval of the Company is required for the acquisition of the Company’s shares bytransfer(v)

a proposal for approval of an amendment to the Articles of Incorporation, as a matter relevant to the class of shares underlying
the stock acquisition rights to shares for offering, to establish a provision that the approval of the Company is required for theacquisition of shares of that class by transfer or that the Company may acquire all shares of that class by a resolution at theGeneral Meeting of Shareholder(10) Restriction on transfer of stock acquisition rights
Acquisition of stock acquisition rights by transfer requires an approval of theCompany’s board of directors.
(11) Policy for decisions on the stock acquisition rights in the event of a structural
reorganization
In the event the Company conducts a merger (only if the Company ceases to exist due
to the merger), an absorption-type company split or incorporation-type company split(only if the Company is the splitting company in either case), or a share exchange orshare transfer takes place (only if the Company becomes a wholly-owned subsidiary ineither case) (collectively referred to as “Structural Reorganization” hereinafter), stockacquisition rights of the companies listed in Article 236, Paragraph 1, Item 8, Items (a)through (e) of the Companies Act (referred to as “Reorganized Company” hereinafter)shall be issued to Grantees of the remaining stock acquisition rights (referred to as“Remaining stock acquisition rights” hereinafter) as of the date immediately prior to theeffective date of the Structural Reorganization based on the conditions set forth below.
In such cases, Remaining stock acquisition rights shall be extinguished andReorganized Company shall issue new stock acquisition rights; however, the issuanceof stock acquisition rights of the Reorganized Company in accordance with theconditions below shall be stipulated in the relevant absorption-type merger agreement,
incorporation-type merger agreement, absorption-type company split agreement,
incorporation-type company split plan, share exchange agreement or share transfer plan.
(i)
(ii)
(iii)
(iv)

(v)

(vi)

(vii)
(viii)

Number of stock acquisition rights of the Reorganized Company to be issued
The number of stock acquisition rights equal to the Remaining stock acquisition rights held by Grantees shall be issued torespective Grantees.
Class of shares of the Reorganized Company underlying the stock acquisition rights
Common shares of the Reorganized Company.
Number of shares of the Reorganized Company underlying the stock acquisition rights
To be determined taking into consideration the conditions of the Structural Reorganization and in accordance with “(2) Classand the number of shares to be delivered upon exercise of stock acquisition rights” above.
Amount of assets to be contributed upon exercise of stock acquisition rights
The amount of assets to be contributed upon exercise of respective stock acquisition rights to be issued shall be the amountcalculated by multiplying the payment amount after the reorganization as stipulated below by the number of shares of theReorganized Company underlying the respective stock acquisition rights as determined in accordance with (iii) above. Thepayment amount after the reorganization shall be one yen per share of the Reorganized Company to be delivered upon
exercise of the respective stock acquisition rights to be issued.
Period during which stock acquisition rights can be exercised
The period during which the stock acquisition rights can be exercised shall be from the date of commencement of the above“(6) Exercise period of stock acquisition rights” or the effective date of the Structural reorganization, whichever is later, to thedate of expiration of the above “(6) Exercise period of stock acquisition rights”.
Capital stock and legal capital surplus to be increased in cases where shares are issued upon exercise of stock acquisitionrightsTo be determined in accordance with “(8) Amount of capital stock and legal capital surplus to be increased in cases whereshares are issued upon the exercise of stock acquisition rights” above.
Restriction on acquisition of stock acquisition rights by transfer
The acquisition of stock acquisition rights by transfer must be approved by a resolution of the Board of Directors of theReorganized Company.
Provisions concerning the acquisition of stock acquisition rights
To be determined in accordance with “(9) Provisions concerning acquisition of stock acquisition rights” above.

(12) Treatment of fractions of the number of shares to be delivered upon exercise ofstock acquisition rights
Any fraction of less than one share in the number of shares to be delivered as a result of
the exercise of the stock acquisition rights shall be discarded.
(13) Date of allotment of stock acquisition rights
May 31, 2023
(14) Issuance of certificates of stock acquisition rights
No certificates shall be issued for the stock acquisition rights.
Note:This document is a translation of the original Japanese document and is only for reference purposes. All readers
are recommended to refer to the original version in Japanese of the release for complete information.
source:Nakanishi Inc. www.nakanishi-inc.jp/ir/irnews

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